In this section we have provided an explanation of the foreign terms most frequently used in the process of incorporation and servicing of non-resident companies

A.G., AktienGesellschaft, Apostille, Articles of Incorporation, Assets, Bearer shares, Beneficial Owner, British Commonwealth, C.G.S., Certificate of Good Standing, Certificate of Formation, Certificate of Incorporation, Certificate of Incumbency, Common Law, Corporate Director, Corporate Search, Dissolution, Domicile, E.I.N., Employer Identification Number, Fiscal Year, Franchise Tax, G.m.b.H., Gesellschaft mit Beschränkter Haftung, Holding Company, I.B.C., International Business Company, Incorporator, Inland Revenue, I.R.S., Internal Revenue Service, Jurisdiction, Legal Opinion, Liabilities, Limited Liability, Limited Liability Company, Member, Merger, Minutes, Nominee Director, Non-Resident, Objects of the Company, Operating Agreement, P.L.C., Public Limited Company, Pass-Through Taxation, R.O., Registered Office, Registered Shares, Ready-made company, Shelf company, Re-domiciliation, Registered Agent, SS-4, S. A., Sociedad Anónima, S.A.R.L., Société á Responsabilité Limitée, Stamp Duty, Tax Assessment Form, Tax Treaty, Treasurer, V.A.T., Value Added Tax, Witholding Tax,

1. A.G., AktienGesellschaft (joint-stock company) - the name of the said legal entity in Germany, Switzerland and other German-speaking countries. One should bear in mind that certain other jurisdictions, where German is not the official language, also accept incorporation of a company with this abbreviation, thereby providing the possibility of creating a totally tax-exempt company, but nevertheless with the image of a German company.
2. Apostille - a special certificate that is attached to another document being certified. The Apostille makes the certifiable document valid in all countries that are members of the 1961 Hague Convention (at present there are more than 80 members). The Apostille cannot exist as a separate document; it is valid only together with the document to which it is attached.
3. Articles of Incorporation - the document certifying the fact of a company's incorporation in the majority of US States. In some States, for example, Delaware, the same document is called a Certificate of Incorporation.
4. Assets - an accounting term, characterising material funds that are at the disposal of the company: movable and immovable property, cash, securities, financial and other claims against other organisations etc.
5. Bearer shares - shares that instead of bearing the forename and surname of their owner, contain the term "the bearer". This means that information on the owner of those shares is not recorded in either governmental or other registers, and thus the owner of these company shares is the physical bearer of the share certificate.
6. Beneficial Owner - the real, ultimate owner of the company, i.e. the person that has the right of ownership over the company and its property, and benefits from the company's activity.
7. British Commonwealth - the association of independent states, as well as dependencies that were formerly part of the British Empire. The main official document underlying the British Commonwealth is the 1931 Statute of Westminster. The objective of this organisation is to ensure business cooperation between its members and mutual consultative and other assistance. During this time many former colonies of Britain have become independent states; some have left the Commonwealth, others have joined it. The ruling body of the Commonwealth is the Secretariat, located in London. The leaders of the British Commonwealth meet once every three years, but the results of those meeting are not binding for other Commonwealth members.
8. C.G.S., Certificate of Good Standing - an official document, issued by the Register of Enterprises in the country of incorporation of a company and certifying that the specific company has, at the date of issue of the CGS, duly registered, has submitted all due reports and paid all state taxes due.
9. Certificate of Formation - a document certifying the incorporation of an LLC in certain US States, in particular - Delaware. In the majority of other States the registration certificate for LLCs is called the Articles of Organization.
10. Certificate of Incorporation - the name of the document certifying the incorporation of the company in the majority of tax-exempt jurisdictions (BVI, Bahamas etc.), in certain European countries (e.g. the UK and Ireland), as well as in some US States (but only for corporations), in particular - in the State of Delaware.
11. Certificate of Incumbency - a document issued either by the Register of Enterprises, or the local registered agent in the country of incorporation, confirming the list of officers of the particular company - its directors and the company secretary. It should be noted, however, that this certificate does not exist in all countries under the name "Certificate of Incumbency". In some countries the document, though named otherwise, eg. Register of Directors, can have the same function.
12. Common Law (Anglo-Saxon law) - the system of law predominant in countries such as the United Kingdom, Ireland and British Commonwealth countries. The distinctive feature of Anglo-Saxon law lies in the fact that all court verdicts are based on precedent, i.e. decisions of the court given in an identical situation in the past.
13. Corporate Director - this term identifies the director or manager of a company that has the status of a legal person. Not all the countries accept nomination of legal persons as managers of a company. However, in most tax-exempt jurisdictions, and in the United Kingdom and American LLCs, the use of corporate directors is quite common in the internal structure of a company.
14. Corporate Search - a request for information submitted to the Register of Enterprises of a particular country regarding a specific company. The Corporate Search answers the question whether a specific company exists, whether all due taxes have been paid, what is the address of its registered office, the date and number of its registration. In some jurisdictions the Corporate Search includes information about the directors and other officers of the company.
15. Dissolution - cessation of a company's existence. This process may take place either on a voluntary basis, according to the decision of the company's owners (i.e. - voluntary dissolution), or as prescribed by law in country of incorporation, if the company fails to submit financial statements or annual reports, or fails to pay the relevant annual duties.
16. Domicile - a country or territory that is legally linked with the physical or legal person, e.g. for a legal person - the country of its incorporation and/or permanent residence, or, for a physical person - the country where the said person was born and/or resides permanently.
17. E.I.N., Employer Identification Number - the tax reference number for US corporate taxpayers. This number is assigned by the US Internal Revenue Service (IRS) after the company has completed and submitted a special application - form SS-4 - to the IRS.
18. Fiscal Year - the period of 12 months, in respect of which a company has to submit financial statements in accordance with the legislation of its country of incorporation.
19. Franchise Tax (duty) - the fixed sum collected annually by a specific country or state from a company for the right of that company to be incorporated and registered there. Franchise Tax is paid annually at the time stipulated by each country, even if the company has not carried out any business operations.
20. G.m.b.H., Gesellschaft mit Beschränkter Haftung - the name of a limited liability company in Germany, Switzerland and other German-speaking countries. One should bear in mind that certain other jurisdictions, where German is not the official language, also accept incorporation of a company with the abbreviation 'GmbH', thereby providing the possibility of creating a totally tax-exempt company, but nevertheless with the image of a German company.
21. Holding Company - the company that holds stock or capital shares in other companies. In some countries (for example - Denmark, the Netherlands etc.), companies acting as holding companies and satisfying certain conditions can enjoy tax privileges.
22. I.B.C., International Business Company - the name of the tax-exempt company in the majority of offshore jurisdictions (Bahamas, British Virgin Islands etc.). To preserve its tax-exempt status, the IBC, as a rule, may not carry out any business activities in the country of incorporation and its directors/managers must be non-residents of that country.
23. Incorporator - the licensed attorney or legal company that draws up and signs the text of the Certificate of Incorporation of an American company, and performs the procedure of registration of the company in the Register of Enterprises of the State. Usually, the Incorporator continues to fulfill also the role of the company's Registered Agent, though this need not necessarily always be the case.
24. Inland Revenue - the tax administration of the United Kingdom. All companies liable for tax in the United Kingdom (i.e. PLCs, Limited companies etc.) must submit their financial statements to the Inland Revenue.
25. I.R.S., Internal Revenue Service - the tax administration of the USA. The IRS supervises the activities and tax payments of all US companies that have an EIN.
26. Jurisdiction - a country or territory, under the law of which a particular company is incorporated.
27. Legal Opinion - the written opinion of a licensed attorney, lawyer or auditor of a particular country, describing the possibility of application of certain legal norms in regard to a specific company or group of companies.
28. Liabilities - an accounting term, identifying the sum of the company's liabilities to other legal and physical entities, i.e. creditors, loans, contracts payable, wages payable and other debts.
29. Limited Liability - the term indicating the restricted liability of the members and shareholders of a company for its debts. In cases of limited liability, the members of the company are personally financially liable only to the extent of the resources invested by them in the share capital of the company. The legislation of the majority of countries requires that where a company has the status of a limited liability company, its name should contain an abbreviation, indicating this status, e.g. Limited, LLC, Ltd. etc.
30. Limited Liability Company - the most popular form of legal entity in the USA, as well as in some other countries. The advantage of an American LLC is its method of taxation - under US legislation, members pay tax on the income derived by an LLC and the company itself is not considered as a separate subject of taxation. Therefore, if structured properly, the company can actually operate in a tax-free regime.
31. Member - holder of an interest in a US LLC. The legislation on LLCs does not contain the term 'shareholder', but functionally the Member plays this role in the LLC. Usually, in the majority of LLCs members also act as managers. Such companies are called member-managed LLCs (i.e. an LLC managed by its members). There is also another type of management - the manager-managed LLC, where a specially appointed manager, who need not be a member, carries out the duties of management.
32. Merger - the process, whereby two companies are merged into one. One of the companies continues to exist, whereas the other ceases to exist and all its assets and liabilities are transferred to the account of the first company.
33. Minutes - a document containing decisions taken by the board of directors of a company, or reflecting some other event in the company, linked with its corporate structure. Copies of Minutes are usually filed and stored.
34. Nominee Director - a director who formally carries out that function and whose name is entered in the Register of Enterprises of the specific country, but who in fact plays no real part in the company's management. In principle, the use of nominee directors is not obligatory, but in practice this service is used in the overall majority of cases.
35. Non-Resident - a term used from the point of view of a specific jurisdiction, denoting a physical or legal person who is not physically resident in that specific jurisdiction and who does not carry out business activities on its territory.
36. Objects of the Company - a description of the possible authorised activities of the company. This description is inserted into the incorporation documents if required by the legislation of the specific country. In such cases the law firm incorporating the company usually tries to list all the possible types of activity in the company's by-laws, in order to provide the entrepreneur with the maximum amount of freedom in running the company. In some countries, for example the USA, there is no legal requirement to list all a company's possible activities in its incorporation documents. In this event, the description of possible types of activity is limited to the phrase 'any lawful activity'.
37. Operating Agreement - a document that serves as the by-laws for an LLC company in the USA. The term by-laws is not applied in the legislation on LLCs, and the activity of any LLC is regulated by its Operating Agreement, signed by the members.
38. P.L.C., Public Limited Company - a company whose shares are in public ownership and are available to an unlimited number of persons, i.e. a listed company. Requirements as regards the incorporation of a PLC are much more stringent compared to those applying to the incorporation of ordinary companies.
39. Pass-Through Taxation - the taxation principle, whereby the profit derived by an entity is not taxed at the level of that entity, but regarded as income derived directly by its members or partners, in proportion to the amount of their interest in the capital of that entity. This taxation principle is applied to a US LLC in particular, unless the LLC itself has submitted a request to the IRS to apply the opposite, i.e. the principle of corporate taxation.
40. R.O., Registered Office - the address of a company (its legal address) in the country of incorporation that is identified in the incorporation documents of the company. Almost all jurisdictions require that the registered office be located in the territory of that jurisdiction. This address does not imply that the operating office of the company or any of its employees is to be found there. Nevertheless, all mail from the authorities or regulatory institutions addressed to the company will be sent to this address.
41. Registered Shares - shares that are registered in the name of a specific physical or legal person. The name (or title) of this person appears on the front of the share certificate and depending on the legislation of the specific jurisdiction, is entered in the company's books and/or recorded in the database of the Register of Enterprises.
42. Ready-made company, Shelf company - a company that has been incorporated previously by the company formation agent, and since the date of its incorporation has been 'resting' in the safe deposit of the formation agent. Property rights for this company can be rapidly registered to client, for immediate use of the company.
43. Re-domiciliation - the continuation of the company's existence as the same legal entity in another jurisdiction. In such an event a special document (the Certificate of Re-domiciliation, Certificate of Domestication or similar) will be issued, certifying that the said company is not newly incorporated, but has been re-registered from another jurisdiction.
44. Registered Agent - a legal or physical person, resident in the country of incorporation and responsible for communication between that company and the regulatory institutions of the country of incorporation. The registered agent is the person who pays franchise taxes and similar duties to continue the legal existence of the company. He can also forward mail, delivered to the registered office of the company. The registered agent is the person to whom the regulatory institutions of the country of incorporation turn if they wish to convey any information to the company.
45. SS-4 - the standard form that is signed and submitted to the US Internal Revenue Service by a company incorporated in the USA, in order to obtain its Employer Identification Number.
46. S. A., Sociedad Anónima (joint-stock company) - the name of this legal entity in Spain and other Spanish-speaking countries (in France - Société Anonyme). One should bear in mind that some other jurisdictions, where Spanish or French are not the official languages, also accept incorporation of companies with such an abbreviation, thereby allowing the creation of a tax-exempt company, but nevertheless with the image of a Spanish/French company.
47. S.A.R.L., Société á Responsabilité Limitée (company with limited liability) - the name of this legal entity in France, Luxembourg and other French-speaking countries. One should bear in mind that some other jurisdictions, where French is not the official language, also accept incorporation of companies with such an abbreviation, thereby allowing the creation of a totally tax-exempt company, but nevertheless with the image of a French company.
48. Stamp Duty - the duty payable for the registration of a specific document or transaction with a public authority. Once the duty is paid, the said document or transaction becomes valid and enforceable, and the seal of the public authority is put on the document, or the relevant duty stamp is applied. Stamp Duty may be either a fixed sum for a specific operation, or it may be charged as a certain percentage of the value of the transaction (for example, 0.5% of the nominal value of shares, in the case of Stamp Duty for the transfer of shares in a UK company).
49. Tax Assessment Form - a standard form sent by the Revenue service of a particular country to the taxpayer (for example, to a company incorporated in that country) with requirement to pay the tax due in accordance with its statements.
50. Tax Treaty - an agreement on excluding double taxation, signed by two countries to prevent deduction of the same taxes from an entrepreneur in both countries.
51. Treasurer - the officer of a company responsible for its financial resources and cash. The legislative requirement to appoint a Treasurer exists only in a few countries, for example in Panama.
52. V.A.T., Value Added Tax - a tax imposed on sales within the European Union. To make VAT payments and carry out the necessary accounting procedures, the company receives its individual VAT registration number in the country where it carries out commercial operations. Companies selling their goods entirely outside the EU, do not pay VAT, even if their country of incorporation is one of the EU member states.
53. Witholding Tax - an additional tax imposed at source by a particular country when various types of remuneration (dividends, interest, royalties etc.) are paid in favour of non-residents of that country.